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Frequently Asked Questions on VAT

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How will Excise tax be levied?

There are two methods of charging Excise Tax on goods, Specific or Ad valorem basis.

Specific excise taxes are charged by quantity regardless of price, i.e., per unit, pack, or kilogram.

Ad valorem excise taxes are charged as a percentage of the value of the product: Ad valorem tax = Number of units or other measurement x Selling price at any specific value per unit x Ad valorem tax rate.

The levy of Excise Tax in the GCC will be on the ad valorem basis. For example, if 100 kg of taxable products are sold at AED 100/kg and if the tax rate is 50%, the excise tax will be AED 5,000 [ 100kgX AED 100/ X 50%].

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